Dallas Fed manufacturing unexpectedly shrinks in May

Manufacturing activity in Dallas shrank in May after
improving in the prior two months.

The index of general business activity fell to
-20.8. Economists had forecast an improvement to -8
from -13.9 in April, according to Bloomberg.

New orders plunged 20 points after turning positive in the
previous month. The gauges of capacity utilization and shipments
also fell back below zero.

Most other regional manufacturing indexes, including those from
New York, Richmond and Chicago showed
that the sector's rebound is taking longer than anticipated.
Like Dallas, there was also renewed slowdown in Chicago
after a few months of recovery.

As usual, the report from Dallas includes anecdotes from
respondents in the manufacturing sector, and a lot was said about
the Department of Labor's new overtime rule.

It raises the minimum salary for eligibility to
$47,476 from $23,660.

Some people were concerned that this would either
hike business costs or reduce benefits, neither of which is good
for employees.

Another respondent noted a "serious productivity problem"
among office workers, and raised concern that the new overtime
rule would increase overhead costs.

The person added:

The younger workers are often off task, engaged on social media,
on the internet, texting on phones and other unproductive
activities. The Department of Labor must realize that if we are
supposed to pay them overtime for work they should do during
normal work this will make us have to focus on micromanaging
employees and reducing compensation to reflect actual
productivity of a mandated 40 hour or less workweek.

Another person said it's too soon to tell whether their clients
in the oil sector would increase capital spending now that prices
are rising.